The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. —John Maynard Keynes in "Concluding Notes on the Social Philosophy towards which the General Theory might Lead" of The General Theory of Employment, Interest and Money (1935)

If Keynes could survey the world's descent into neofeudalism, I wonder what he would say now. Economic ideas are both adaptable and readily disposable, as we have seen in the recent economic decisions of the "market-oriented" Bush administration when vested interests are threatened.

That is not to say that economic ideas are not important but that they are more the offspring than the progenitors of social philosophy.

Related posts
Religious Truth of the Day (9/15/06)
Word of the Day: Greed (3/25/08)

Tags: news and politics economics economic philosophy quote of the day

Siemens ... last week ended up paying $1.6 billion in the largest fine for bribery in modern corporate history. —Siri Schubert and T. Christian Miller reporting in "At Siemens, Bribery Was Just a Line Item"

Siemens, according to Wikipedia, is "Europe's largest engineering conglomerate and the largest electronics company in the world.... The company is a conglomerate of three main business sectors: Industry, Energy and Healthcare with a total of 15 Divisions."

The Times story, based partly on an interview with Mr. Siekaczek of the telecommunications unit who authorized the payouts from Siemens headquarters, contains a number of little snippets of interest—

• Concerning the countries where you almost always pay to play—

  Afghanistan, Haiti, Iraq, Myanmar and Somalia are the five countries where corporate bribery is most common, according to Transparency International.

The heavy American involvement in the first three countries on the list doesn't seem to have raised the tone. I hope we haven't been setting a bad example.

• Concerning the countries where Siemens really paid to play—

  The S.E.C. complaint said Siemens paid its heftiest bribes in China, Russia, Argentina, Israel and Venezuela.

  If we order the countries by their gross domestic product (GDP), we see that Israel, which should be last on the list, got more than its fair share.

• On the extent of the corruption—

  What is striking about Mr. Siekaczek’s and prosecutors’ accounts of those dealings, which flowed through a web of secret bank accounts and shadowy consultants, is how entrenched corruption had become at a sprawling, sophisticated corporation that externally embraced the nostrums of a transparent global marketplace built on legitimate transactions.
  ....

  Matthew W. Friedrich, the acting chief of the Justice Department’s criminal division, called corruption at Siemens “systematic and widespread.” Linda C. Thomsen, the S.E.C.’s enforcement director, said it was “egregious and brazen.” Joseph Persichini Jr., the director of the F.B.I.’s Washington field office, which led the investigation, called it “massive, willful and carefully orchestrated.”

  Ms. Thomsen expressed herself more fully on the matter, according to other Times reporters—

  Linda Chatman Thomsen ... said that the company paid an estimated $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and Latin America. She called the schemes “unprecedented in scale and geographic reach.”

  Siemens seems to have gotten to everybody everywhere except in North America and the Antarctic. Can this be?

  Oh, wait—

  Crucially, while Siemens admitted violating the United States Foreign Corrupt Practices Act, it avoided either a guilty plea or a conviction for bribery, allowing it to maintain its status as a “responsible contractor” with the federal Defense Logistics Agency. Without that certification, Siemens could have been excluded from public procurement contracts in the United States and elsewhere. German authorities are preparing a similar certification.

  Yep. Siemens appears to be just the sort of company the Pentagon can really do business with. It would be a shame to remove them from the payroll.

• On Siemens' history and business model—

  World War II left the company shattered, its factories bombed and its trademark patents confiscated, according to American prosecutors. The company turned to markets in less developed countries to compete, and bribery became a reliable and ubiquitous sales technique.

  “Bribery was Siemens’s business model,” said Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany. “Siemens had institutionalized corruption.”

  Perhaps the Times didn't want to embarrass anybody about those bombed factories. Wikipedia has the lowdown—

  Preceding World War II Siemens was involved in funding the rise of the Nazi Party and the secret rearmament of Germany. During the Second World War, Siemens supported the Hitler regime, contributed to the war effort and participated in the "Nazification" of the economy. Siemens had many factories in and around notorious extermination camps such as Auschwitz and used slave labor from concentration camps to build electric switches for military uses. In one example, almost 100,000 men and women from Auschwitz worked in a Siemens factory inside the camp, supplying the electricity to the camp.

  Gerhard Cromme, the chairman of Siemens, has announced that “Siemens is closing a painful chapter in its history.” His words seem to echo what an earlier Siemens chairman must have said as the company prepared to "move forward" after the War.

  We can only wonder what a company with this much experience is prepared to do next.

Tags: news and politics corporate corruption multinationals military-industrial complex

The U.S. consumer price index [CPI] fell by a seasonally adjusted 1.7%, the [Labor] department reported, the biggest drop since the government began adjusting the CPI for seasonal factors in 1947.

But on a non-seasonally adjusted basis, the CPI fell by 1.9%, the biggest decline since January 1932, at the nadir of the Great Depression.

—Robert Schroeder reporting in "Drop in consumer prices is most since 1932"

The fall in the CPI for October broke a record exceeded only by these new numbers for November.

Last month I noted the worry that we are on the verge of a deflationary spiral. In greatly simplified form it might look like this: Consumers stop buying, factories (the few that are left) stop producing, workers are laid off, laid-off workers stop buying, more factories stop producing, more workers are laid off—and so on, down and down. This forces prices to fall since no one is willing or able to buy. It's the sort of situation that normally only a good war can fix.

But you should know by now that if our pundits and politicians fear deflation, it is not for the sake of workers. It is the rise in the value of the dollar that threatens their constituents.

Investors in the form of private equity funds, hedge funds and the banks have borrowed a great deal of money in order to make more money (quite literally, I'm afraid)—all under the premise that the dollar will continue to lose value. Dollars borrowed today will be repaid tomorrow in dollars that will be more plentiful but worth less, which effectively reduces the rate of interest for those making money off money.

This of course does not apply to workers. Their dollars not only did not become more plentiful over time but lost their buying power as well. Under George Bush wage earners lived to see an expansion of the economy without a corresponding increase in wages—another "first."

All the money rose to the top. So with increasing costs of food, fuel, housing and health care, workers were left somewhat in a pickle. To keep the wheels of commerce greased it was necessary to loan them money—off of which our capitalists expected to make even more money. Whee! But you do not need to be an economist to see that this was a situation that could not continue indefinitely.

To put it another way, while the value of investments was inflating, the cost of labor was deflating. Strangely, deflation in this sector of the economy was not considered a problem at the time.

Of course if the wealth had been more fairly distributed, it would have hurt the upscale real estate market, the yacht market, the art market and the payday-loan market, which was providing a lovely new revenue stream for the banks. But the current economic disaster could have been postponed, if perhaps not totally avoided.

Since our national economy depends upon indefinite postponement of the bills coming due, a more worker-friendly policy over the years—such as a minimum wage tied to inflation—might have kept it going for awhile. Instead the government found itself handing out checks last year in an effort to "jump start" the economy.

By then everyone was too deeply in debt for such a pittance to matter, and here we are today. To the best of my knowledge, amazingly, at the time of the give-away not one politician, columnist, reporter or union leader asked, "But what if we had just paid them more?"

Now comes the news that the value of the worker's dollar rose again last month. Calculated against its purchasing power in 1982-84, the dollar's purchasing power increased from 47.1 cents to 48.2 cents (November CPI report [pdf], p. 18)—more than a 2% increase.

Two percent is a nice little raise in one month. Enjoy it while you can.

Related posts
"First" of the Day: Fall in consumer prices (11/20/08)

Tags: news and politics economic statistics recession economic depression deflation

Reports that certain acquaintances of Mr Madoff may have taken fees for bringing him new business has put the Palm Beach community up in arms.

“These guys were all members of the country club,” said Richard Rampell, a Palm Beach accountant with many friends and clients who invested with Mr Madoff. “It’s a very tight knit group, like a fraternity . . .  You’re not supposed to take advantage of or make money off your fraternity brothers.”

—Julie Macintosh reporting in "Madoff scandal brings pain to Palm Beach"

Let's see. Tips on how to make an annual 10% off your millions or billions come free to the members of the Palm Beach Country Club set. It's one of the benefits of membership. And the touter offers the tip just because he likes you.

Of course if members aren't supposed to make money off each other, from whom does one make one's money? I leave it to you to work out the details.

Profiting from relationships is so ... well, déclassé. Unless of course you're a realtor—

Nadine House, a real estate agent, said she knows about 15 people who had money tied up with Mr Madoff, all of whom belonged to the Palm Beach Country Club and had “great wealth”, even as defined within such a rich enclave.

“They just feel so betrayed, and their lifestyles are going to change so dramatically,” she said.

“But we all started out poor once, and we can do this again.”

Fortunately the wealthy can count on the free market. Condo Vultures™ Realty, which represents only buyers, has offices in South Florida and other areas with distressed properties. They will help you downsize.

As an old bartender pal used to say, "Are we having a lifestyle yet?"

Related post
A note on understanding elites (9/03/07)

Tags: news and politics real estate lifestyles recession economic depression class war

New [housing] starts dropped an eye-popping 18.9% to a seasonally adjusted annual rate of 625,000, the lowest since the Commerce Department began keeping records in 1959. According to similar records kept elsewhere, it's the slowest pace of construction in the post-World War II period. —Rex Nutting reporting in "Housing starts plunge 18.9% to record low"

Related post
"First" of the Day: Fall in consumer prices (11/20/08)

Tags: news and politics recession economic depression real estate home construction

Deputies: Man flunks drug test, steals fridge full of urine
—headline in the Gainesville Sun

Of course that's the official version. But could there have been a leftover ham sandwich in the fridge?

No way to know for sure. The refrigerator's still missing.

Tags: news and politics crime humor

... [O]ur task is not to encourage moral struggle or to build or demonstrate inner virtue. It is to make life less punishing.... —B.F. Skinner in Beyond Freedom and Dignity (1971), p. 81

There is a lot that could be said about this. But since this is my day off from encouraging moral struggle or demonstrating inner virtue, I won't.

Tags: news and politics morality ethics humanism capitalism socialism

At a hearing last week, Marc Dreier’s attorney said that his client is being held in solitary confinement until federal prison officials determine whether the Park Avenue lawyer is a gang member. —FINAlternatives in "Dreier Held In ‘Inhuman’ Solitary Confinement, Lawyer Says"

What's taking them so long? Didn't they notice the rings and the business attire?

But seriously—

Gerald Shargel said officials at the Manhattan Correction Center told him Dreier could be held in lockdown for another three weeks, held in his cell for 24 hours a day without telephone calls, visitors, or reading materials.

“How ludicrous is that?” Shargel asked during Dreier’s bail hearing. “You could lose your mind in three weeks.”

So could anyone else.

But there could be reason to deny Dreier a telephone. Before his arrest in New York, Dreier was picked up in Canada for impersonating another attorney. Reporters from the NY Times tell us that—

Being jailed in Toronto did not curb Mr. Dreier’s interest in moving money, and he feverishly worked the phones, according to court papers.

At this point, the law firm’s comptroller refused his requests to move millions of dollars. He did agree, though, to Mr. Dreier’s request to be connected to the bank that handled the law firm’s accounts, an assistant United States attorney, Jonathan R. Streeter, said in a bail hearing on Thursday. “He successfully got $10 million transferred out of an escrow account into a personal account that he controlled,” Mr. Streeter said.

That money, like all the rest, remains unaccounted for.

The Cayman Islands are lovely this time of year.

Related post
Crime of the Day: Marc Stuart Dreier caught acting (12/09/08)

Tags: news and politics prison crime Marc Stuart Dreier humor

When someone is stopped by the police for erratic driving, the officer may suspect that a little nipping was involved. Official procedure at this point varies from state to state, but in many states the driver is asked to blow into a breath analyzer, or "breathalyzer," as part of a "field sobriety test." In my state a refusal to submit to the breathalyzer results in an immediate six-month suspension of the driver's license. This doesn't, of course, prevent the driver from being arrested for "drivng under the influence" (DUI) or the more serious "driving while intoxicated" (DWI).

Over my years of studying the behavior of drunken sheriffs, police officers, judges and politicians, I've noted that they almost always refuse the breathalyzer test, opting instead for the license suspension.

Refusing the breath test will later come as a great relief to the defense attorney, who can then argue that at the time of his arrest Judge Branchwater had just been put on a new medication having severe and unforeseen side effects. On the other hand, if Judge Branchwater had taken the test and failed, the defense's only arguments would have to come down to whether the machine was accurate or whether the test had been properly administered.

When accosted by a patrolman, the authorities know what to do from their experiences in court or their background in the law. But your average Joe Blow doesn't, so he foolishly yields to the officer's suggestion to breathe into the breathalyzer.

A case in point

Nevertheless—and despite his advantages—Judge Peter Tourison found himself last March in a New Jersey police station waiting to take a breath test. Here's what happened—

Tourison tried to apply Chapstick to his lips, which delayed the Alcotest because nothing can be in or around a driver's mouth for 20 minutes before the test. When the police took away the Chapstick, Tourison used another tube before it, too, was confiscated.

Then, when a patrolman turned his back, Tourison popped a penny in his mouth.

It's an old trick, and it's one Tourison ... should know. A penny won't affect the machine, but any object in a person's mouth may show that the officer did not perform a proper oral inspection.

Further, Tourison didn't blow properly into the Alcotest machine, so it took seven tries before a confirmed reading could be obtained.

I must confess I was unfamiliar with any of these techniques.

Well, it did the judge no good—or at least not enough—because he still blew a .08 after all that delay. He pled guilty to the DWI charge and then had to go before the state's Advisory Committee on Judicial Conduct for being a lawbreaker and a reprobate and for making the other justices look bad.

His attorney argued that he should receive a reprimand, since that is what New Jersey judges of similar quality had received. But the committee members were incensed by Tourison's antics at the police station.

His attorney responded that—

they were just "stupid things" people do when they are drunk. "I don't see the penny as an aggravating factor," he said. "Look at the 1990 case of Justice [Robert] Clifford, charged with DWI, who refused the Breathalyzer test. His refusal was never considered an aggravating factor by the Supreme Court."

But the Vice Chairman of the committee drew the proper distinction, saying that "refusing a test and 'attempting to fix' a test were two different things."

Before you get on the road

So if you are unwise enough to be caught drinking and driving this holiday season, take these tips from the pros—

• Take care to address the lady or gentleman as "officer." "Ossifer" is not a word.
• Don't ask what it was you were doing. The idea is that you're supposed to know.
• Bring along some gum or mints—or better, a ham sandwich. Exlax, for those who dare, can reveal the fragile state of your health as well as encourage the police to maintain a more hands-off approach.
• Whatever you do, don't exhale—especially into a machine.

Tags: news and politics drunk driving humor

This Year's Most Fashionable Holiday Party Accessories Are Black People —The Gawker

The Gawker seems to be a vaguely liberal, New York–chic online gossip tabloid that Simply Appalling is determined not to become—even if there were money involved. But their headline caught my eye because I don't doubt the truth of it.

As befits a gossip sheet, the evidence for the headline's assertion is skimpy. Hamilton Nolan writes—

Now that Obama has been elected, a tipster inside a PR firm tells us, clients are demanding "an increased number of African Americans added to the guest list" at their holiday parties. In the spirit of hope! The email can't really be "verified," but appears genuine and is just too important not to share. This firm has even assembled an official internal "Diversified Holiday Guest List," in which they rank the top 10 acceptable black socialite attendees, in order of desirability.

Now if they put them up for auction I'll begin to worry.

Tags: news and politics racism lifestyles ethnic diversity

When celebrity lawyer Marc Dreier was arrested in Canada, the press was left wondering what the charges were. A Toronto police spokesman cleared it up—

Basically what they are is that he impersonated himself as someone else and not himself.

Self-impersonation is not a crime—yet. But I worry about that. What is a person with multiple personalities to do, we wonder?

In any event, Dreier showed up at a meeting of the Ontario Teachers Pension Plan claiming to be someone else. Then the real person showed up. No word yet on the gender of the impersonated, but I'm hoping wigs were involved.

Leaping from the frying pan into the cookie jar, there are now allegations that millions are missing from the escrow accounts of Dreier LLP—the accounts that lawyers hold in trust on behalf of someone else.

Dreier is the sole owner of a firm employing some 250 lawyers. He explained this unusual arrangement last year: "This is a system for lawyers who believe democracy is overrated -- or at least that it is in business. Under this alternative model, all policy decisions ultimately reside with the single equity partner." The prosecution may remind him of that in court, and the lawyers cleaning out their desks may be pondering the disadvantages of the "alternative model."

It's going to be a sad Christmas in lawyerville. Above the Law reports that "The firm may not be able to make its next payroll, on December 15. There is only $300,000 in the payroll account, and the next payroll is for $2.6 million."

The annual Christmas party at the Waldorf has been canceled.

Follow-up post
Prison Procedure of the Day: Determining gang status (12/16/08)

Tags: news and politics criminal law attorneys

Get more out of what you're into — Cox
—as heard on TV by Yours Truly

Advertiser's dollars spent for TV ads are usually wasted on me. For one thing, I generally avoid the commercial channels. And for another, if I do happen to be watching a commercial channel I'll flip to fly-fishing or painting-by-the-numbers before I'll watch the commercial.

But occasionally the mind wanders and a commercial will slip in, its attack confined to the subliminal. It was on just such an occasion that I was snapped from my reverie by this commercial for Cox Communications.

I don't know what it was about the ad that caught my attention. Was it the clever tension, the push-pull set up by the prepositions "out of" and "into"? Was it the almost perfect iambic tetrameter—duh-dah duh-duh-dah duh-dah duh-dah?

In the end I can't really say. But the phrase keeps turning in my head, and I fear it will be sometime before I can get it out. So for penetrating my barriers to advertising I thought were nearly impregnable, cheers to the ad agency for a job well done—and here's to Cox!

Tags: news and politics marketing advertising humor

The Mortgage Bankers Association said its latest survey, released Friday, showed that 10% of mortgages on one- to four-family homes were at least a month overdue or in the foreclosure process in the third quarter. That is up from 9.2% three months earlier and 7.3% a year ago. The current level is the highest since the trade group began such surveys four decades ago. —James R. Hagerty and Deborah Solomon reporting in "Rising Number of Homeowners in Trouble"

I had scarcely finished my little post explaining the further convulsions to be expected in the home real estate market when the Mortgage Bankers Association released its findings for July through September.

Aside from finding that 10% of all mortgages were either overdue by at least a month or in foreclosure, the report revealed two more "firsts" hidden in that statistic.

• For loans 90 days or more past due but not yet in foreclosure, the rate "jumped by 45 basis points, the highest increase in this category ever recorded in the MBA survey."
• "the percentage of loans in foreclosure, 2.97 percent, hit a new record in the period from July to September," according to Charles Heller.

Let's see what the percent of foreclosures comes to in absolute numbers. Two-thirds of the 111.7 million occupied housing units have a mortgage, or 74.5 million units. If 2.97% of them are in foreclosure, that translates to 2.2 million homes.

Think of the number of homes lost in Hurricane Katrina—estimated at 275,000 (said to be 10 times the loss in any previous natural disaster)—and then consider the number of homes lost in the next-to-last quarter of the Bush administration—a most unnatural disaster. Do you think FEMA will help?

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Happy days are here again (10/04/05)
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"Jingle mail" and a little Holiday ditty (12/04/08)

Tags: news and politics real estate housing recession economic depression statistics